Options Basics

It is a common mistake of novice option traders to believe that if the stock goes up in price, then the options written on that stock will necessarily rise with it. While it is common for the two to rise and fall in tandem, this is not always the case.

Option greeks measure the options sensitivity to various risk components inherent to the price of an option. Delta, gamma, theta, vega, and rho measure the speed of the underlying securities price movement, interest rate movement, time decay of an option, and volatility.